Once you have gotten past the hurdle of saving the deposit, the next steps you’ll be faced with will be providing the necessary paperwork for your Mortgage Broker in Leicester.
Here we have put together a list of tips and tricks on how to be best prepared for your mortgage process, hopefully making it quicker and smoother.
An up-to-date credit report is something that is vital to the process and should be something that you prioritise. By doing this you’ll make sure that you’re not caught off guard by any previously unpaid payments that could stop you from progressing your mortgage.
Our Mortgage Advisors in Leicester will take a look at which lender will be right for you to go with, so it’s best to make sure all your information is up-to-date and accurate, so that you can be placed with the appropriate one.
You can improve your standing on your credit report by making sure that you are on the voters roll and cancelling any old or unused credit cards that you still have in your name.
You’ll need to prove to your Mortgage Broker that you are exactly who you claim to be, by providing them with photo ID. You have the option of either using a Driving license or Passport.
If you are choosing to use your Driving Licence for your proof of address, you won’t be able to use it for your proof of ID and will have to use something else.
For those who are currently working within the country and using a Visa, then this is something you will also be required to provide.
As touched upon in the previous point, you will also need to provide your mortgage advisor with a proof of address. If you are using your Passport for photo ID, you will be able to use your Driving License for this.
Otherwise you can use either a utility bill or a bank statement that has been dated within the last 3 months.
The bank statements you provide will also help to prove how much money you earn, as well as giving some insight as to what your regular spending habits are like.
This is something that again, highlights just how important it is to prepare ahead of time and be careful as to how much money you’re spending and what you’re spending it on.
Not all mortgage lenders will want to see your bank statements, though the majority will, so it is important to make sure that you have these to hand just in case.
Whilst you may have already saved up your deposit for the property you’re looking to buy, you will still have to provide proof of how this was saved for anti-money laundering purposes and demonstrate that you have everything in place for it.
A useful tip that we would suggest here, is to make sure your finances are stable and in one place, so that when it comes to the audit trail, everything is simple and can be checked over quickly.
To show the mortgage lender that you can in fact afford their mortgage payments, you will need to prove your income.
For customers in regular employment, as touched upon before, you’ll need the last 3 months payslips. On top of this though, some lenders will want to see the most recent P60.
Lenders may also consider various other factors such as overtime, commission, bonuses and any earnings you have gained from other employers.
If you happen to instead be a self-employed mortgage applicant, then you will also need the help of your accountant who will obtain for you, your last 2 or 3 years proof of earnings.
For those of you who submit your own accounts, we will be more than happy to advise you on what you’ll need to obtain from the Government gateway.
By creating a solid plan of what your budget will be, you will be able to gain a wider perspective of where you will need to spend your money and what everything is.
It is best to make a list of things such as your council tax, utility bills, and anything that you have to regularly spend money on, such as food and drink. Doing this will help to determine how much disposable income you have overall once those payments have gone out.
If you are struggling with this, then we would be happy to send you a budget planner template so that you can get started.
In summary, preparation is crucial for a First Time Buyer in Leicester to get their mortgage sorted as quickly and efficiently as they possibly can, and this will only be made simpler by seeking out expert Mortgage Advice in Leicester.
The quicker you put in the time and effort to collect all of the essential information you need, the easier it will be to speed up your process and get an extra step further to achieving your mortgage goals.
Congratulations are in order! You have passed all of the required exams and have successfully reached your career goal of becoming a Newly Qualified Teacher. The next step is for you to find yourself a job within the classroom, making use of your teacher qualifications!
You may find that you’re in a particular circumstance that puts you in need of starting to look at your options for Moving House in Leicester, if say you are currently living in a property a bit further away than the opportunity you have been given.
Soon enough you will be on the hunt for a place to move, struggling to balance homeownership and trying to make sure that you’re comfortable in your newfound teaching role.
This is not something that you are alone with though, as we have helped a lot of customers over the years who are under an equal amount of stress, needing help with their mortgage whilst they focus on their career.
It may be quite difficult trying to find a mortgage lender who will want to offer a mortgage to a teacher who is newly qualified.
The main reasons for this will either be due to the fact that there is no work history or because they will be on a temporary contract.
Even with this in mind, it is not impossible to find a mortgage for a Newly Qualified Teacher, which is something that our team of dedicated Mortgage Advisors in Leicester have helped a great deal with in our lifespan as a mortgage broker.
From time to time, there will be some mortgage lenders who may have preferrable deals on offer to people who are working within this particular work sector.
The key to success is finding the best mortgage lender to go with, which can often be the most difficult part of that process.
It is here where our experienced mortgage advice team in Leicester can sit and take a look through thousands of mortgage deals, doing everything they can to find the perfect one for your circumstances, with favourable rates.
It’s important to remember that whilst it can be difficult, you are not completely restricted in the options that are available to you.
That being said, here are some of the more common mortgage types that we find are available to Newly Qualified Teachers:
The lender may take a few different factors into consideration too. There are mortgage lenders who do not need to see previous employment, as well as letting you have access to up to a 95% loan-to-value.
Depending, a 12-month first contract may be recognised as the same as a permanent job role, as opposed to being recognised as a temporary one.
Lastly, there may be some lenders out there who are willing to start the mortgage process prior to your start date, so long as you can provide evidence of a signed contract and a start date.
This can be helpful, as you may find that you are ready to start making your first mortgage payments with first months pay from your new job by the time that the mortgage has completed.
Our trusted team of hardworking and loyal mortgage advice experts in Leicester have a wealth of experience working within the mortgage industry, helping various home buyers with their mortgage situations.
You’ll find there are a lot of benefits to using a Mortgage Broker in Leicester. We will take the weight off your shoulders, search thousands of deals of your behalf, recommend conveyancing solicitors and so much more.
To take a look at all of the mortgage options available to you, use our online form and book yourself in for a free mortgage appointment with a dedicated mortgage advisor in Leicester, who will take some information from you and let you know what your next step will be.
During the start of your mortgage journey, you’ll most likely have to deal with an estate agent. If you end up in conversation with a larger estate agent, they will want you to use their own in-house team of mortgage advisors & conveyancers.
A lot of first time buyers in Leicester fall into this and are persuaded to use their services, usually spending more money than they otherwise would’ve had to.
The good news is that you don’t need to use their advisor at all, a point we’ll expand upon later on, and you may also open yourself up the either the same deals or better by going elsewhere.
Speaking to a Mortgage Advisor in Leicester outside of the estate agent could be a much better route for you to follow. The advisor working for the estate agent will give you a biased view that only benefits them and their profit.
A dedicated mortgage broker in Leicester will help you see the positives and negatives of each side. If you do still choose to go with the estate agents mortgage advisor, that is okay, though it’s important to remember that you have options.
We always aim to be transparent & efficient, looking to give the best possible experience and the best advice for our customers personal and financial circumstances, whilst providing a fast & friendly mortgage advice service.
If you do opt to use the services of your estate agent’s in-house mortgage advisor and conveyancer, have a good think about where their service cost is coming from.
They could potentially be charging you for their services without asking you and adding it onto the costs of other services, hoping you won’t notice.
Taking on expert mortgage advice in Leicester will reduce your concerns of this, as you will be well informed and aware of what you’re paying for. Your dedicated advisor will break down the cost of everything for you.
Even though it is highly illegal for them to do so, if you have opted not to use their services, they may refuse to put your property offers forward.
For example, you could be instead using the services of a mortgage broker and they may push forward someone else’s offer to completion over yours, purely out of spite that you didn’t use their services. Once again, this type of practice is illicit behaviour.
Estate agents may get even attempt to charge their customers extortionate fees for in-house conveyancing. Even with a straightforward purchase, you may find yourself being charged somewhere within the realm of £1,500, which is far too much.
Any time this occurs, you have full consumer rights to be given a full breakdown of exactly why it costs this much and where their calculations came from.
An experienced mortgage broker in Leicester will only want to do right by the customer. By coming to us for mortgage advice, you can avoid the tactics mentioned above.
Making sure you use the right Mortgage Advisor can be difficult; but can you make it easier?
From time to time, mortgage cases may require specialist care from a trusted mortgage advisor in Leicester. The in-house mortgage advisors from the estate agents don’t care for the details, so long as they can make a profit from it, even if it’s detrimental to you.
Speaking to an expert mortgage broker in Leicester you’ll find yourself matched up with an appropriate advisor with experience in a situation that’s at least similar to yours. They will work with you to ensure you get the right outcome.
An example of this would be the buy-to-let mortgage experts we have on hand for any landlords, new or experienced, looking to get a mortgage.
Once you’ve completed your free mortgage appointment and obtained an agreement in principle (we can normally get this for you within 24 hours of your appointment), your mortgage process can finally get underway.
We utilise our many collective years of providing open & honest mortgage advice in Leicester, helping thousands of customers achieve their home owning goals and dreams. Our customer reviews are a great inside look at how much of a difference our service makes to homeowners.
Some people would rather take on the world of mortgages by themselves, and this is okay! The internet is a wonderful place and you can now do most of what you would need to do, by yourself on your browser.
By utilising price comparison websites, you may be able to find the best mortgage deal for your circumstances through your own research and understanding.
An obvious benefit to doing this would be that you’d save money on additional fees. Providing you have confidence in what you’re doing and understand the process, you could get through it awfully quick, more so than someone going to their bank.
The catch is that online mortgage shopping is quite difficult to do. Before you make any agreements, you should always make sure you have the best fit for your circumstances. Here are some tips if you’re doing this;
Making an appointment with a bank to speak to a mortgage advisor may be challenging. This isn’t always the case, though it also may just be the wrong choice for you to make. Here are a few things to look out for;
Taking on the services of a mortgage broker that has no association with any estate agents ensures that you, as an inexperienced first time buyer in Leicester, have someone there to do the hard work for you, without any conflict of interest risks.
We work for you and only you, with no external ties. Whilst we do have mortgage lenders on panel, we don’t work for them, we simply match customers up to their various unique deals.
Our team do what they can to make sure you’re happy with your mortgage journey and the outcome you end up with. Managing Director Malcolm Davidson is here to explain both the positives and negatives of using a trusted mortgage broker:
As could likely be predicted, we personally feel like there are some really great reasons why you should use a mortgage broker in Leicester. This isn’t born out of bias, however, as we understand there are pros and cons to both, no matter if you’re a first time buyer in Leicester, looking to remortgage in Leicester, or have another situation.
Regardless of if you’re going via a branch or online, you are still able to go direct to the mortgage lender yourself. Below are all the pros and cons to either of your options.
When thinking about going direct to a bank or building society, the first thing that springs to mind is that you won’t be required to pay a broker fee, which in turn would possibly save you money. In the past, another positive that people thought of was “the bank manager knows my finances inside out”, though after credit scoring systems were introduced, this no longer became a factor.
On top of this, some mortgage lenders will have exclusive mortgage products on offer, that can only be obtained by going direct. They offer these as a way of attracting a good spread of business from their consumers and other brokers, turning exclusive products on and off whenever they believe it to be necessary. On the other side of the coin, some products may only be accessible by going to the broker and not by going direct to the lender.
From 2014 onwards, lenders were restricted from selling their mortgages on a non-advised basis to any customers of their services (those with bank accounts, for example). Up until that point, some applicants felt like members of staff who were not qualified for giving advice, were pushing their services on them.
They also felt like they weren’t able to benefit from some of the consumer protection that would normally come with mortgage sales performed by professionally trained mortgage advisors in Leicester.
The changes took a long while for lenders to come to terms with and towards the back end of 2014, it was not uncommon for customers to have to wait a long time to get a mortgage appointment. This is unfortunately still the case today sometimes. When you have had an offer accepted on a house, this is the last thing you need or want!
Because of the issues present with going direct, much like the wait for an appointment, more and more applications were made with mortgage brokers who could freely offer a same day service, something we are able to do ourselves. When you get in touch with us, we get you booked in with a mortgage advisor in Leicester as quick as we can, either on the same day or at your earliest convenience.
Affordability is an important factor too, as the quality of a lenders deal won’t matter if you have no way of affording it. Buying a house is such a large step in people’s lives, that they often would rather get professional and personal advice from a qualified and experienced mortgage advisor in Leicester.
Nowadays we find that a lot of mortgage applications aren’t as simple anymore. For whatever reason it may be, there are so many things that can make a case more complicated. Some examples of these are:
In the past, mortgage lenders were able to stand head and shoulders above the competition by simply offering a deal that was similar to one offered by another lender, but with slight differences to make it more appealing. Fast forwarding to where we are now and it is all so much more different, with lending criteria being the difference maker between deals and lenders.
An example of this, is that some lenders may lend more than other lenders might have to Self Employed applicants. Some also take a more sympathetic view on previous discrepancies that are showing on your credit report.
Your situation will be unique to you. It may be similar, but it will never be the same as another case. When you explain your position to an experienced mortgage broker, it is highly likely that there will at least be at least something similar that we have encountered before, allowing for a more personalised service. Hopefully, our hard working mortgage advisors will be able to get you a favourable deal with good interest rates.
It’s more than just getting a mortgage though. Even if the application itself is fairly easy, our customers who are first time buyers in Leicester rely on our experience and knowledge for more insight into the mortgage process.
For example, we are able to sit and discuss how much they are going to offer on the property they are buying. From there, our team of mortgage advisors in Leicester can recommend our customers other necessary professional services such as solicitors, whilst also explaining the different types of property survey and protection that is available to them.
One of the main pros of using a mortgage broker in Leicester, we believe, is that we are a lot more responsive than the mortgage lenders have been known to be. Our team work from early until late, all throughout the week (including out of hours), dedicated to our customers and ensuring the process is as speedy and stress-free as it can be.
Something that does get overlooked from time to time when looking at why customers may prefer to use a broker, is that everyone nowadays everyone has such a busy schedule. You might need a mortgage but don’t have the required time to sort it out. In these cases, your mortgage advisor can take the weight off your shoulders and work through it for you.
Professional applicants especially will see the benefits of this service, as they have clients of their own that they charge out their services to and often don’t have the time to work through it themselves. The customers we deal with regularly appreciate the benefits of having an expert on their side.
Perhaps in the future we’ll see lenders wanting to limit their links to brokers and wanting to take their business back. If this does happen, we don’t see it being likely that they will hire more staff in their branch networks. The future of all industry seems to be based around technology and the mortgage market may very well be heading this way too.
That may work for customers who are more than happy to do business with a “robo-advisor”, especially for cases that are easy and don’t require a thorough analysis. For the majority of people, however, there’s an element of “realness”, that “human touch” that can’t be obtained by going this route, and can only be found by speaking to a real mortgage advisor in Leicester.
To find out more information on our service or to present any mortgage queries that you have, please Contact Us and we’ll book you in for an appointment with a mortgage advisor in Leicester as soon as we can.
The circumstances you find yourself in will dictate the amount of deposit you will need for a property that you set your sights on. In this article we will take a look at how much deposit may be required, based on your personal situation.
Previously, it would be quite a common sight to find 100% mortgages. Before their eventual fall, even Northern Rock were offering their customers 125% loan to value mortgages. What that means, is if you were buying a property valued at £100,000 they would still lend you up to a whopping £125,000, and yet people wonder what went wrong…
The reason that these mortgage lenders will need you to put down a deposit, is to reduce their lending risk. If they lend a customer exactly 100% of the purchase price and that customer unfortunately falls into arrears, they would then have to repossess the property.
From there, lets say property prices dipped; now they’re trying to sell a house that’s worth even less, in order to make their money back. Naturally, with lower house prices, that’s not going to happen and they will be at a financial loss. Because of this reason, the higher percentage you’ll find is a 95% mortgage, requiring only a 5% deposit from you.
It’s also believed throughout the mortgage world, that if you haven’t invested some of your own or your family’s money into your home, then you are likely to be less attached and more willing to give up if making payments becomes challenging.
As well as this, many lenders feel that if you can’t save up at least a 5% deposit for a property, or even find someone to gift you this amount, then you probably aren’t quite ready to join the property ladder.
Not directly, however, if you are able to find 5% of the deposit required from your own saved income, then you may happen to qualify for the government Help to Buy Equity Loan Scheme.
This government scheme only applies to new build properties, with the idea being that you put in 5% and then the government will loan you up to 20%, making up a total of a 25% deposit. After 5 years, you need to look at paying back the equity loan back, sometimes through a remortgage or from savings you have been able to make during that time.
In most cases, you’ll find that 5% is considered enough to put down for a deposit on a property, however, not all lenders will offer 95% mortgages, which can leave you with limited options. Saving up for a larger deposit, for example, 10% deposit, will open the door to more products and most likely at a lower rate of interest.
With the majority of 95% deals, you will normally need a good credit score to qualify. There are lenders out there that may consider you for a 95% mortgage with a fairly average credit score, but you would probably incur a much higher rate of interest.
In the event of a poor credit history, the majority of the specialist lenders will require a minimum of 15% deposit if you have a poor credit history. As mentioned earlier on in this article, the reason the lender will need a deposit is simply to reduce their risk in case a repossession occurs.
It has always been a requirement to put down a larger deposit for buy-to-let mortgages and the majority of lenders at the moment are looking for at least 25%.
Technically, this could be possible, though pretty much all lenders will not allow this, as essentially this would still be 100% lending. Again, this no longer exists due to the aforementioned risk involved with such a financial process.
Yes, this happens all the time. We will often see this being called the “Bank of Mum and Dad” (both birth and adopted parents, as well as carers & legal guardians) gifting their loved ones the deposit, or other family members such as any Aunties & Uncles.
We have even seen instances where family friends are able to gift you money. These are all perfectly acceptable options, providing they are able to evidence the funds, prove who they are and confirm they are not expecting repayment of the gift in the future. We have written a detailed article all about Gifted Deposits in Leicester.
If you are buying as a sitting tenant and your landlord or family member has given you a discount from the properties value on the open market, or if you qualify for a discount to buy from your local authority (housing association or council) under the Right to Buy Scheme, then you will typically not need to put any of your own money in as deposit. This is due to the existing equity being already “built-in” to the mortgage deal.
Please bear in mind that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice in Leicester.
The Help-to-Buy Scheme in Leicester is a widely known way for many first-time buyers to find their footing on the property ladder, though it can be confusing for many who are researching for the first time. There have been various different aspects that come under the terminology, so you may not fully understand what you’re getting into.
The most common one that is still around and the one you would be using as a first-time buyer, is the Help-to-Buy Equity Loan Scheme. You can rest assured that you will have us to support and guide you throughout your mortgage process. Not only will we assist you with understanding the scheme, but we will scour the market until we find the best mortgage deal for you and your personal circumstances.
You will find that having our brilliant mortgage advisors in Leicester on hand is not only incredibly helpful in securing your mortgage but also in working through the sometimes complicated processes of the government Help-to-Buy Scheme.
The scheme was set up by the government, primarily to help homeowners, including first-time buyers. If you decide to make use of the scheme, the following will apply to you and your mortgage process:
If you think that you qualify to use this scheme but are not sure whether or not you will have the ability to do so, simply get in touch with us and one of our dedicated mortgage advisors in Leicester will take a look at your circumstances. Once we have gotten a measure of your situation, we will be able to check whether you fall within the criteria of the offer.
Our mortgage service is tailor-made specifically to suit you and your needs regarding a mortgage. The Help-to-Buy Equity Loans apply to new-build properties up to a maximum value of £600k. The purchase price of the property gets made up of your 5% deposit, 20% government loan, and 75% balance covered by the mortgage that we will locate for you.
Once you get in touch, we will take the time to talk you through the whole mortgage process. If the property that you wish to buy fulfills the terms, we can discuss the scheme with you in larger detail. Whether you are purchasing from a builder or via an estate agent, we can communicate with them on your behalf.
As soon as you contact us, we will arrange a convenient time to suit you for your free, no-obligation mortgage consultation. If you are not clear on the figures and how the process works, we will go through the calculations with you until it is all understood.
We will take the time to ensure that not only are you happy with the figures but that they are affordable and fit in well with your financial circumstances and levels of income.
If you are based in Leicester and living in a property owned by your local authority (that means your local council or housing association), you may have the opportunity to buy your home through use of a Right-to-Buy in Leicester.
The Right-to-Buy Scheme, providing you have the eligibility to do so, allows you to buy a property at a discounted price. This means that instead of paying a particular amount in rent to the owner for a property that isn’t yours, whilst the monthly mortgage payment may vary, you are able to truly call it home.
If you are new to the Right-to-Buy Scheme in Leicester or are confused about anything we mention here and would like guidance, please Get in Touch with our dedicated mortgage advisors in Leicester. They’re readily available throughout the day to answer any questions you may have.
We have a lot of experience in working with Right-to-Buy mortgages from our many years in the industry. As such we know how it works like the back of our hand and will be able to talk you through the process.
If you have no prior knowledge of the Right-to-Buy Scheme in Leicester, i.e., this is the first you’ve heard of it, it might be worth your time contacting your local authority to check whether or not you’re eligible to buy your rented home.
Once they have confirmed eligibility, you should receive a Right-to-Buy an offer from them, highlighting what the prices of the property will be when the scheme is in place and ready to go. The offer usually holds an expiry date, so you will need to speak with a fast & friendly mortgage advisors in Leicester in plenty of time before that period ends.
After you get in touch with us, we will book you in with a free initial mortgage consultation, taking account of your details so that we can understand your situation. You’ll speak to an experienced and dedicated advisor, who will hold your hand through the process.
To qualify for the Right-to-Buy discount, you should have been living in your rental property for three years, whether this is three years continuous or not.
The Right-to-Buy discount won’t be available to you if any of the following apply:
Exceptional living circumstances may also not be accepted, e.g., selected housing for the elderly or if you have a career in a specific sector.
There are three main types of property surveys that are available to you. We have put together a short guide outlined with a general look at which property survey would be a more suitable option for you.
As a First-Time Buyer in Leicester, your next step after being accepted for your offer on a property is to arrange a survey to establish the sort of condition that the property is in as well as the value of it, as this will give the lender confidence that it is worth what you are paying for it.
If anything of concern is found on the survey, you are then in a position by law to approach the seller and negotiate a price for the work that will be required to rectify it.
Here’s a short video from the Royal Institution of Chartered Surveyors (RICS) that explains the different types available to you.
There are 3 main types of property survey available to you in Leicester:
A fundamental valuation will be the cheapest option for a property survey, and you will be required to have one of these before you are able to receive your mortgage offer. This is not to be confused with a full survey. The mortgage valuation confirms to the lender that the property is worth the amount they are going to be lending you.
Your mortgage lender may even offer you a free fundamental valuation as part of your mortgage deal. A Mortgage Valuation will not highlight any repairs that are needed, though it may still point out any apparent defects and recommend that you take a closer look at them yourself.
A Homebuyers report will cover structural safety and highlight any apparent problems for you, including damp, as well as anything that doesn’t meet current building regulations. This kind of survey will give you an independent report of your property by an expert in surveying.
It’s important to make sure you aren’t paying for two surveys as well. It is advisable to ask the mortgage lenders surveyor to carry out this report on your behalf – it will usually take a couple of hours for the surveyor to complete.
A Full Structural Survey is a survey type more advisable for older properties and those of non-standard construction. Depending on how large and the type of the property in question is, a full structural survey can take up to a full day to complete.
A full structural survey provides a detailed report on the current state of the property and highlights any issues that should absolutely looked into prior to going ahead with the purchase, providing you with peace of mind about the general condition of your potential new home.
You can find a surveyor to carry out a Homebuyers report or building survey through the Royal Institution of Chartered Surveyors.
When you start your mortgage process in Leicester, you will come to realise that there are lots of different options available to budding homeowners and existing homeowners alike.
Whether you’re a First-Time Buyer looking for your first home, are Home Movers looking for your next home or are looking to Remortgage in Leicester, there are many different routes you could take.
This article will cover a list, alongside related videos, of the most popular types of mortgages available on the market to customers. If you have any further questions mortgage-related, then please do not hesitate to contact us and speak to one of our dedicated Mortgage Advisors in Leicester.
A fixed-rate mortgage means that your mortgage payments will remain as they have been for a set period. You can set the length of the fixed term yourself, with common options typically being 2, 3, or 5 years or longer.
No matter what happens to inflation, interest rates, or the economy, you can rest assured that your mortgage payment, usually your biggest outgoing, will not change at any point during your term.
A tracker mortgage means that your interest rate will follow on with the Bank of England’s base rate. This means that the lender that you are with does not set the rate themselves.
You will be paying a percentage above the base rate of the Bank of England. To provide an example of this; if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying a scale of 2%.
When you take out a repayment mortgage, you are paying capital and interest together. So as long as you keep your payments going for the full length of the mortgage term, the mortgage balance is guaranteed to be paid off at the end, with the property becoming yours.
It is the most risk-free way for your capital to be paid back to the lender, in the early years it is mainly the interest that you are paying, and your balance will go down at a slower rate, especially if you have taken out a 25, 30, or 35-year term.
This situation will switch up in the last ten years or so of your mortgage, where your payments are paying off more capital than interest, and the balance will come down at a much quicker rate.
While many Buy to Lets in Leicester get set up on an interest-only basis, it is much more challenging to get a residential property on that same basis.
It is a lot less likely for lenders to offer an interest-only product nowadays. However, there are certain circumstances where this may be a viable option.
These include downsizing when you get older or having other potential investments that you will use to pay back the capital. Lenders are being a lot more stricter when it comes to offering these products now, and the loan to values are a lot lower than they once were.
With an offset mortgage, the lender will set you up a savings account alongside the mortgage account you have with them.
This works in a way where, let’s say you have a mortgage balance of £100,000 and £20,000 gets deposited into your savings account, you would only pay interest on the difference, so in this case it would be £80,000. It can be a very efficient way of managing your money, especially if you pay higher rates of tax.
You could be a First-Time Buyer in Leicester looking to get onto the property ladder, a Home Mover in Manchester or a homeowner at the end of your term, looking to Remortgage for Home Improvements. In any of these cases, overpaying, even by a small amount, can be incredibly useful when it comes to the amount on the interest you pay back over your mortgage term. The earlier you begin to overpay on your mortgage, the better the effects it will have.
Some homeowners prefer not to do this, some cannot afford to. Quite often though, it will come down to life just getting in the way. Regardless of the circumstances, overpaying is definitely a good habit to get into when you take out a mortgage, but in reality, there’s always something else we’d rather buy, as opposed to making an extra payment on our monthly mortgage.
Part of the dilemma here is remembering to make those extra payments. It’s unlikely to cross your mind too often, except perhaps when your mortgage only has a few years left to run.
So, if you can see something of yourself in the above and would like to be making those extra payments so that, perhaps you can retire a year or two early, then what should you do?
It’s highly recommended setting up a standing order payable to your lender each month. Set up the standing order to go out on the same day as your regular mortgage payment. E.g. your mortgage payment is, say £500pm and is collected on the 1st of the month. You can afford to pay an extra £75pm, so set up a standing order for £75pm to go out of your bank also on the 1st
The reason for the above is that very quickly you will start to “feel” that your mortgage is £575pm and you will get used to that within a matter of months.
The big advantage of setting up a standing order to a direct debit, is you (the payer) are completely in control, unlike a direct debit where this is the receiver.
Therefore, if you find yourself a little tight with money for one month. You can easily log in to your online banking and pause the standing order so that it would cancel any future payments from going out until reactivated.
Up until the point of stopping the payments, at least you have benefited from the additional payments made until that point, and as mentioned above, this does not stop you from reactivating your standing order in the future when you are more financially comfortable.
Some mortgages will even let you make reduced payments or take a Mortgage Payment Holiday in Leicester if you have been overpaying for a while. Before choosing a payment break though it’s essential to check with your lender that you are eligible to do so to avoid a bad mark on your credit report.
Whether a First-Time Buyer or going for a Remortgage in Leicester, overpaying your mortgage is a great habit to get into. You don’t need to go hell for leather at it unless you feel so obliged but even shaving a year or two off will be very welcome when you near the end of the term.